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German Consumer Prices Recover Ahead of ECB


German Consumer Prices unexpectedly halted their decline in May, offering some good news to policy makers struggling to revive price growth in the 19-nation euro area.
The inflation rate rose to zero, data from the Federal Statistics Office in Wiesbaden showed on Monday. That’s above the median estimate for a reading of minus 0.1 percent in a Bloomberg survey of economists, and compares with minus 0.3 percent in April. Prices increased 0.4 percent from the previous month.

The report from Germany, Europe’s largest economy, is the latest sign that the inflation outlook in the region is gradually improving as European Central Bank officials travel to Vienna this week for their monetary-policy meeting. They are expected to keep their stimulus plan unchanged after President Mario Draghi announced an expansion of quantitative easing by a third to 80 billion euros ($89 billion) in March and a cut the deposit rate further below zero.

Updated euro-area economic projections due on Thursday may provide some clues about the impact of the latest easing round. Vice President Vitor Constancio said last week that he’s optimistic the ECB will reach its inflation goal of just below 2 percent by 2018, reflecting the upgraded stimulus and rising oil prices. Inflation hasn’t been in line with the ECB’s definition of price stability since early 2013.
Before the German report, economists estimated that the euro-area’s inflation rate rose to minus 0.1 percent in May from minus 0.2 percent in April. Eurostat will release those figures on Tuesday.

via Bloomberg

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.

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